693.113 (Manchuria) Petroleum/77
The Consul General at Mukden (Ballantine) to the Chargé in China (Gauss)84
Sir: I have the honor to inform the Legation that in pursuance of the authority contained in the Legation’s telegram of December 8, 11 a.m., I proceeded to Hsinking on December 19 and called in company with Mr. Butler, the British Consul General, on Mr. Kanki, chief of the Commercial Bureau and the ranking officer of Japanese nationality in the Foreign Office (the Vice Minister being absent in Tokyo).
We discussed with him the so-called “light oil” question, the substance of my representations being contained in an unaddressed Aide-Mémoire, which I left with him. Copies are enclosed.85 Mr. Butler also left an Aide-Mémoire, which was similar in general scope. It will be noted that the Aide-Mémoire, which I left with Mr. Kanki is unaddressed, and contains no mention of “Manchukuo” or the “Manchukuo” Government.
We were received in a friendly manner, and our conversation was conducted entirely in the Japanese language. Mr. Kanki, however, seemed to be nervous, which was apparently due to his being somewhat at a loss just how to respond to our representations. When at the outset we said we wanted to talk about the oil question, he said he presumed that it was the monopoly question. Later on, when we had finished presenting our case, he asked whether, if the “light oil” question was settled to the satisfaction of the American and British oil companies, this would serve to allay their opposition to the forthcoming enforcement of the Monopoly Law. We said that the Oil Monopoly was an entirely separate question. Mr. Kanki suggested that the two were interdependent, and we replied that we had no instructions to discuss the question of the monopoly. Mr. Butler said that he had already expressed himself on the monopoly question in an interview some months ago, and Mr. Kanki was prompted to say that the authorities were now considering a reply to the Aide-Mémoire he had left on that occasion.
Mr. Kanki then asked whether we felt that the American and British oil companies were assessed the higher rate of duty and the Japanese importers the lower rate without reference to the grade of oil imported. We replied that we were not asserting that the authorities [Page 796] had fixed the schedules deliberately for the purpose of discriminating against the former, but that the practice followed by the customs resulted in an unfair discrimination. We said that the practice seemed to us just as unreasonable as if, to give a hypothetical example, it should be ruled by the customs that the duty levied on horses was not applicable to horses under 800 pounds in weight, but that such horses would [be] assessed the duty provided for cows, such duty being less than one-fifth that leviable on horses. In such an event a horse weighing 810 pounds would have to pay a duty more than five times as great as that a horse 790 pounds in weight would have to pay.
Mr. Kanki then asked why the American and British oil companies did not import the same grades of kerosene that the Japanese companies did. We replied that for forty years they had been developing good will on the basis of standard products of good quality sold under distinctive brands, and it seemed unreasonable that they should now have to discontinue marketing these brands or lower their quality.
Mr. Kanki appeared to be satisfied with our explanations, and was not at all disposed to be argumentative, or to defend the position of the “Manchukuo” authorities. The outcome of our conversation was that he promised to present our case sympathetically to the competent authorities. I cannot, however, feel optimistic that our representations will be productive of any direct or immediate results, since I do not consider that Mr. Kanki is an influential factor in the situation. Nevertheless, I do consider that our visit will be of indirect benefit as showing the purpose of our governments to support the American and British oil companies in their difficulties.
Respectfully yours,